Have you heard the line recently that grid-based battery storage is “coming”, but is not quite “commercial”, but might be in a few years time, or even a decade or two?
It’s a common misconception. But if you wondered about the overwhelming response to the recent tenders by South Australia and Victoria for the country’s largest battery storage installations, here’s why: The technology is already in the money.
That, at least, is the estimate of Bloomberg New Energy Finance analyst Kobad Bhavnagri, who says that battery storage is not just in the money, it is a long way into the money in states like South Australia, already with a high level of wind and solar and volatile wholesale electricity prices.
“We’ve seen the price of battery packs as fallen by 75 per cent by 2010, and our calculations show that will fall by a further 75 per cent by 2030,” due to technology innovation and manufacturing scale, Bhavnagri said.
That means that large-scale battery storage is already viable in large parts of Australia. In South Australia, it is offering internal rates of return of around 30 per cent (even without new market rules that will further encourage them), and in Queensland they are also profitable due to that state’s price volatility. NSW and Victoria will follow soon enough.
“That is a great story for integrating renewables,” Bhavnagri said. (And we should also point that this value stack for storage does not include network benefits, where battery storage is already seen to reduce cost of upgrades of poles and wires by around 30 per cent).
So, what does this mean for the grid? The CSIRO and the Energy Networks Australia gave some insight into this in their report last week, in which they outlined their pathway to a zero emissions grid based around solar, wind and storage, and why it would be much cheaper, cleaner, smarter and more reliable than the current iteration.
AGL Energy gave its own version of the future this week in a presentation to a Macquarie Group conference. As we reported earlier, the company once known as Australian Gas Light no longer sees gas as a transition fuel.
AGL says the economics of gas-fired generation don’t stack up, because wind and solar and storage are cheaper, and major gas producer Santos this week gave us an insight into why gas has little credibility on the environment front.
In his presentation, AGL chief financial officer Brett Redman provided this graph illustrating what has been presume to happen on the left – renewables with gas filling in the gaps – and what will happen with storage.
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